The Do’s and Don’ts of Buying Gold

buying gold

Millions of pounds worth of physical gold is purchased every year, for many different investment purposes. While some investors like to direct their investments toward Gold Mutual Funds or Exchange Traded Funds, many more prefer the investment opportunities that physical gold provides.

Physical gold may be a new concept to a novice investor – unsure of the investment process or unaware as to how to purchase gold, or how to find a reputable dealer. If you’re considering investing in physical gold or buying gold online, read our tips on the do’s and don’ts, before you buy.

Don’t pay a premium for proof coins

Proof coins are special edition coins, struck for collectors and often mounted in a special case. They are almost always more expensive than their counterparts and sold mainly for their collector’s value. For investment purposes, choose regular gold coins or bars and find a reputable gold dealer when buying gold online.

Don’t buy coins just for historical value

As tempting as owning a piece of history may be, you may end up overpaying if you purchase gold coins just for their historical value. Unless you’re a collector or expert in coins, these numismatic coins can be quite confusing.  With only certain coins having much historical value, you may end up overpaying, as their value is as a ‘collectible’ and based on various different factors, rather than their gold content. Semi-numismatic coins of 100 years or less provide the best sweet spot between modest premiums and additional growth potential.


Don’t buy large amounts of fractional coins

There is more value for the investor in purchasing full, one-ounce bullion coins rather than lots of smaller fractional coins.  Fractional gold coins are often sold at slightly higher markups than standard one-ounce coins and can be bought as half-ounce, a quarter-ounce and even one-twentieth of an ounce.  These smaller fractions are generally included for diversification and divisibility or to make up the value of the desired investment amount.

Don’t buy gold using leverage

Borrowing money to make a bigger investment in gold is risky. The price of gold is volatile, and if the price dips far enough, you may be at risk of large losses arising from the leverage. By trading in gold this way, you may also be paying additional intermediary commission, as well as possible interest on the money you leveraged to invest in physical gold.

Don’t delay your payment when buying gold

When investing in gold, you should always remember that gold is a commodity and that prices do change, very often. The day you plan to buy physical gold, you should check the spot price of gold and ensure you make your payment on that day, to ensure you get that amount of gold.  Delaying your payment means the price and value of the gold will have changed.

But Do…

When choosing to invest in physical gold or when buying gold online, DO be sure to use a reputable gold dealer, ask about a ‘Buy-Back Guarantee’, decide if you want it delivered or stored and always check your dealer is BNTA registered.

To learn more, contact Physical Gold today.

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